3 Dec 2012 AMC

3 Dec 2012

Market Summary 

Oh well... Tradition didn't hold yesterday...  All thanks to the disappointing ISM report yesterday... The market started very bullish in the open, but subsequently the market started to sell off and remained sideways and volatile throughout the session.



Defense Contracts
 Lockheed Martin Corp., Bethesda, Md. (FA8818-13-D-0002); Oribital Sciences Corp., Dulles, Va. (FA8818-13-D-0004); and Space Exploration Technologies Inc., Hawthorne, Calif. (FA8818-13-D-0003), is being awarded a $900,000,000 indefinite-delivery/indefinite-quantity, firm-fixed-price contract for the U.S. Air Force Rocket Systems Launch Program.  Contract supports space launch services for space missions for the Department of Defense and other government agencies.  The location of the performance is Magna, Utah, Chandler, Ariz., and Hawthorne, Calif.  Work is expected to be completed by Nov. 29, 2017.  The contracting activity is SMC/SDK, Kirtland Air Forve Base, N.M. 


General Electric, Lynn Mass., is being awarded a $265,000,000 three year performance based logistics requirements contract to provide repair, replacement and program support of 35 F404 engine (F/A 18 A-D) aircraft components.  Work will be performed at the Fleet Readiness Center Southeast, Jacksonville, Fla., and is expected to be completed by Dec. 31, 2015.  The applicable Navy Working Capital Funds will not expire at the end of the current fiscal year.  No funds will be obligated at the time of award.  This contract was competitively procured with six offers solicited, and one offer received from the solicitation.  NAVSUP Weapon Systems Support, Philadelphia, Pa., is the contracting activity (N00383-13-D-001M).

Market Internals

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Looking at the internals, the market isn't really bearish afterall, however, it's just the materials and industries dragging the market down. With the VIX up by another 4%, we'll be expecting some volatility to come together with the major reports.

Leaders and Laggards

Technical Updates

though I hate to be bearish, but I gotta say that both SPX and DOW is exhibiting a double top on a intra-day basis which is scaring me(as i'm holding long positions). Luckily i'm theta positive... can collect premiums..

Commentaries 

Stock Market Update

16:05 ET Dow -59.98 at 12965.60, Nasdaq -8.04 at 3002.2, S&P -6.72 at 1409.46 :[BRIEFING.COM] Today's session began on a positive note as upbeat European trade contributed to the bullish sentiment. However, the strength was temporary and the S&P 500 turned lower once the November ISM Index of 49.5 missed expectations. After sliding to its lows shortly after midday, the S&P 500 remained in the red and settled lower by 0.5%.  The materials sector was the biggest laggard as chemical producers saw broad weakness. In addition, utility and industrial stocks underperformed as well. The telecom space was the only advancer as defensive trade took hold.  Looking back at November, equities ended the month largely unchanged despite a mid-month stumble. The S&P 500 lost over 4.0% during the first half of the month, and managed a swift recovery. Headline-driven trade proved to be alive and well as the market hung on every word out of Washington regarding the ongoing budget talks.  In addition, European uncertainty remained palpable as Eurozone and International Monetary Fund officials spent longer than expected ironing out the details of the next tranche of Greek aid. The repeated attempts at implementing reforms have proven futile, and the sovereign's financial health has shown no signs of improvement. Due to this, officials, as well as the markets, are growing more skeptical regarding the country's ability at fulfilling further obligations. Elsewhere, Spanish region of Catalonia held an election, and the vote favored parties which support holding a referendum on secession.  Domestically, the attention turned to the budget debate after Barack Obama was reelected to second term as president.  Markets Unimpressed by Election Results  The major averages entered the November 7 election on an upbeat note. On Election Day, the S&P 500 advanced almost 1%, and the benchmark index ended the day just 3% below its 2012 high of 1474.51. That evening, equity futures saw a positive initial reaction to Mr. Obama's victory. However, sentiment turned as the morning approached and European markets began reacting to the results. The loss of optimism was attributed to questions whether a Democratic president and a split Congress can strike a budget deal to avoid going over the fiscal cliff. After President Obama was declared victor, the S&P 500 opened lower by 1%. Broad-based weakness persisted throughout the day and pressured the index to a loss of 2.4%.  The next six sessions saw continued softness and the S&P 500 lost an additional 3%. This was also notable from the technical standpoint because the slide brought the index below its 200-day moving average. As the markets continued heading south, Congressional leaders, as well as the President, held numerous press conferences aimed at reassuring the public regarding their determination to reach consensus. Despite the reassurances, the two sides maintained a familiar tone. President Obama insisted on increasing revenuemainly through tax hikes for top earners while House Speaker Boehner was more focused on spending cuts.  Apple Halts its Slide On September 21, Apple (AAPL) marked its all-time high at $705.07. However, the following month saw the stock slide over 15% as shares approached bear market territory. The softness was notable as the S&P 500 shed only 2.2% during the same period. As such, early November weakness weighed on the largest tech component and caused it to underperform the market once again. The post-election sell-off resulted in Apple dipping another 9% before a mid-month reversal helped the stock recover its first-half losses entirely.  Utilities Suffer  Before Hurricane Sandy made landfall in New Jersey on October 29, utility stocks were enjoying a solid six-month run. However, the storm caused considerable damage to infrastructure and weighed on electrical utilities. In addition, industry standards came into question after some areas remained without power for weeks. To investigate the matter, New York Governor Andrew Cuomo appointed a special panel tasked with evaluating electric utilities' preparedness for extreme events. With the sector under scrutiny, investors considered the possibility of tighter regulation and increased costs for electric companies. As a result, the SPDR Utilities Select Sector ETF (XLF) lost nearly 5% during the month. Some commentators suggested the anticipation of a dividend tax hike at the end of the year is also responsible for the weakness. However, it should be noted that the high-yielding telecom sector was largely unchanged on the month.  Coal Burns Out  During the first presidential debate, Republican challenger Mitt Romney said he "likes coal." The remarks prompted a surge in coal stocks, and fueled the Market Vectors Coal ETF (KOL) to a 10% gain going into the election. President Obama's victory ensured that the administration will continue to favor cleaner energy, and coal stocks responded by retreating. Since November 7, KOL fell nearly 9% while individual names like Alpha Natural Resources (ANR, -25%), James River Coal (JRCC, -25%), and Peabody Energy (BTU -14%) saw significant losses.  Thanksgiving Rally Led by Turkeys of the Year  The Thanksgiving week saw a thin-volume rally, which halted the post-election slide. Interestingly, some of the top performers during that stretch were stocks that had suffered heavy losses during earlier months. Green Mountain Coffee Roasters (GMCR, +46%), Groupon (GRPN, +52%), Nokia (NOK, +20%), and Research In Motion (RIMM, +26%)were among the names which underperformed going into the month, but saw outsized gains in the 30 days since.  Post-election Winners Flying Under the Radar  In addition to influencing near-term sentiment, the November election also created ripples in some thinly-traded corners of the market. Gun makers shot up following President Obama's reelection. On November 8, the S&P 500 lost over 2% but Smith & Wesson (SWHC) and Sturm, Ruger & Co (RGR) surged 7% and 10%, respectively. The two stocks continued their run and ended the month with respective gains of 13% and 33%. The post-election surge was sparked by concerns over tighter gun regulation during the President's second term. The concern was confirmed on Black Friday when 154,873 FBI background check requests for gun sales topped last year's one-day record by 20%. Gunsmiths enjoyed a tremendous run on the back of same regulatory concerns when President Obama was first elected. Since 2009, quarterly results of the two companies have frequently shown notable increases in order backlog as they struggled to keep up with the demand. The industry strength is confirmed in stock price as Smith & Wesson trades 370% above its value four years ago while Sturm & Ruger has added an eye-popping 900%.  Looking to December: Budget Showdown Front and Center  In December, markets will remain focused on the budget debate as the cliff nears. It is also likely that frequent press conferences aimed at calming the markets will continue. However, until a deal is reached, short-term volatility is likely to persist as investors continue showing heightened sensitivity to headlines and news reports. ..NYSE Adv/Dec 1176/1816. ..NASDAQ Adv/Dec 1111/1372.

After Hours

18:00 ET ICLR +0.3%, PBY -6.6%, CWST -4.9% following earnings/guidance :

Today's session began on a positive note as upbeat European trade contributed to the bullish sentiment. However, the strength was temporary and the S&P 500 turned lower once the November ISM Index of 49.5 missed expectations. After sliding to its lows shortly after midday, the S&P 500 remained in the red and settled lower by 0.5%. 

Today after the close the following companies are scheduled to report earnings: CWST, PBY, EXA

Futures are lower after hours: S&P 500 futures are -1.82 from fair value of 1407.92 and Nasdaq100 futures are -0.99 from fair value of 2670.99.

Tomorrow morning before the open no economic reports are scheduled to be released.

Tomorrow before the open the following companies are scheduled to report earnings: AZO, BMO, BIG, TOL, MTN

Commodities

Treasuries

Tuesday do not have much reports coming out. So I reckon it's gonna be a day where the bulls can rack back some gains before the major reports gyrate the market even further.

Market Call: Flat to upside

Date: 4 Dec 2012